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BOJ & Fed Preview

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HEADLINES

 

 

  • Dollar eases from near 1-month high as Fed, Evergrande eyed
  • Yuan Pressured as Evergrande Risks Grow; Oil Lifts Commodity Currencies
  • Gold rises as Evergrande fears persist, market on standby for Fed
  • Oil rises as U.S. storm aftermath squeezes supply
  • Stocks claw back as markets calm after Evergrande-led slide
  • BoJ Preview: Forecast from Standard Chartered

 

 

FOREX

 

 

Dollar eases from near 1-month high as Fed, Evergrande eyed

 

The U.S. dollar eased slightly from a near one-month high as global markets firmed somewhat on Tuesday a day after a risk-off mood dominated by solvency uncertainty of China's Evergrande, while investors awaited the results of the Federal Reserve's two-day policy meeting. 

After reaching its highest level since Aug. 23 on Monday, the dollar straddled around the unchanged mark on the day, briefly moving higher as early gains on Wall Street's benchmark equity indexes faded.

 

Yuan Pressured as Evergrande Risks Grow; Oil Lifts Commodity Currencies

 

The offshore yuan lingered near an almost one-month low on Tuesday while safe-haven currencies including the dollar benefited as investors sought shelter from a potential default by property developer China Evergrande. Commodity currencies gained amid a rally in crude oil prices, with the Canadian dollar getting an additional boost from a projected election victory for the country’s ruling party.

 

 

COMMODITIES

 

 

Gold rises as Evergrande fears persist, market on standby for Fed

 

Gold gained on Tuesday as unease over China’s Evergrande insolvency spurred safe-haven buying, ahead of a Federal Reserve meeting that could provide clues on the central bank’s timeline for cutting its stimulus to the U.S. economy.

Safe-haven asset gold has gained on “recent concerns about global economic growth, or more specifically, a Chinese economic slowdown,” which are enough to outweigh a recovery in equities, said David Meger, director of metals trading at High Ridge Futures.

 

Oil rises as U.S. storm aftermath squeezes supply

 

Oil prices rose on Tuesday, after sharp losses the previous session, amid tighter U.S. supplies, ending days of losses as global markets remain haunted by the potential impact on China’s economy of a crisis at heavily indebted property group China Evergrande.

 

 

STOCKS

 

 

Stocks claw back as markets calm after Evergrande-led slide

 

World stock markets edged back on Tuesday while the U.S. dollar held relatively steady a day after heavy selling in equities, as investors assessed the level of contagion stemming from the distress of debt-saddled developer China Evergrande.

MSCI’s gauge of stocks across the globe gained 0.35%, following Monday’s biggest percentage drop in two months. European indexes rose solidly while Wall Street’s main gauges were gaining in afternoon trade.

 

 

ANALYSIS

 

 

BoJ Preview: Forecast from Standard Chartered

 

“We expect the BoJ to maintain the policy balance rate at -0.1% and the 10Y yield target at c.0%. The economy has shown a weak recovery trend due to continued quarantine measures in response to the pandemic. The government designated major cities Tokyo and Osaka as emergency areas (i.e., where business activity is restricted after 8pm) until 12 September. Recent high-frequency data shows that industrial production (IP) dropped 1.5% MoM in July, reversing the +6.5% increase in June. As such, we think the BoJ will not consider this an opportune time to change its monetary policy stance.”

 

FOMC preview: Fed seeks to downplay rate hike prospects as taper talks advance

 

The Federal Reserve is not expected to announce any major policy change at the conclusion of its meeting on Wednesday, but markets could jitter from Fed signals that one could be coming soon.

The Fed has signaled that it will likely start pulling back on its extraordinary monetary support before the end of the year. The Fed's playbook calls for slowing its asset purchase program first, followed by interest rate hikes down the line.

 

 

CHART

 

 

Bitcoin – Daily Candlesticks

Source: GKFX Prime Metatrader 4

BTC/USD has broken below 44,000, the neckline of a possible head and shoulders pattern and is now testing former resistance at 41,000. - Prepared by Trading Writers*

 

 

CALENDAR

 

 

*Times in GMT

Source: FX Street Economic Calendar

 

 

SOURCE

 

https://www.fxstreet.com/economic-calendar
https://www.fxstreet.com/news/boj-preview-forecasts-from-six-major-banks-very-little-surprise-potential-202109211055
https://www.reuters.com/article/global-precious/precious-gold-rises-as-evergrande-fears-persist-market-on-standby-for-fed-idUSL4N2QN2FF
https://www.reuters.com/article/global-markets/global-markets-stocks-claw-back-as-markets-calm-after-evergrande-led-slide-idUSL1N2QN20R
https://www.cnbc.com/2021/09/21/oil-prices-us-supply-china-evergrande.html
https://www.fxempire.com/news/article/yuan-pressured-as-evergrande-risks-grow-oil-lifts-commodity-currencies-778749

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